Ed O’Bannon, Shawne Alston, Johnny Manziel, and Non-Fungible Tokens (NFTs) Part 2

In 2014, Texas A&M only sold souvenir jerseys featuring the number 12 on it. The prior year, they barely kept up with demand for souvenir jerseys with the number 2 on the front and back — that was Johnny Manziel’s number. Texas A&M was already planning for an adverse ruling with the upcoming O’Bannon vs. NCAA trial.

Allison Stokke had an infamous photo taken of her at a high school track meet in 2007. The unauthorized proliferation of the image of her with a vault pole brought an international media storm along with threats and stalkers. If she had control over the rights and likeness of that photo, could she have created and crafted a different financial (and more importantly emotional) outcome for herself and her career?

Now, the Supreme Court of the United States will hear arguments on the Alston vs. NCAA case on March 31. This might be a historical moment for the Supreme Court: not only because of student-athlete limits on compensation and entitlements, but the arguments fundamentally might change the interpretation of the Sherman Antitrust Act.

But technology often beats the regulatory environment to the punch. What happens when a high school athlete signs with Nike and allows royalty conversion of name, image, and likeness (NIL) through an NFT? The university who then recruits the student-athlete for a scholarship might want 100% of those royalties, which is how a scholarship currently functions in exchange for a university education.

With an NFT-based NIL contract with already in place, the university and NCAA have difficulty enforcing compensation rules because there is no current regulatory framework for NFTs. You can’t enforce a contract when there is no regulatory environment regarding the provisions of the contract — and that’s the workaround. The demand for NFTs in the future might force colleges to pay the athlete and agent (Nike, for example) for NIL usage rights — until the NCAA figures out how to legally get this in a scholarship contract. For now, the athlete has a chance at circumventing a horrible oligopoly by accelerating a rights conversion through a new technological platform.

In part 3, I will tell you how Rickie Fowler could NFT his way into Eternity.

Edward Kim is co-founder and General Partner at 3LA Ventures. You can contact him at ed@3lavc.com

March 11, 2021

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